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Recent information released by the Office for National Statistics shows the scale of the impact COVID-19 has had on UK businesses.
Of the latest response rate, on average 23.4% of companies across all industries reported a turnover decrease of more than 50% during April. The accommodation and food services sector were particularly hit harder, with 57% of those responding businesses revealing the same turnover decline.
Every industry has been affected in some way by COVID-19. For two months now, many organisations have been forced to close their doors or suspend their activities, forcing a rethink, a pivot, or a change in innovation to a) ensure long-term survival, or b) meet current demand from the millions of people self-isolating.
Dyson designed a new ventilator within 10 days and produced 10,000 of them for the NHS. Leon converted some of its restaurants into mini supermarkets to provide groceries. New Balance, known for its shoes, shifted to making face masks. And Jaguar Land Rover pivoted at its Warwickshire site to make NHS-approved protective visors after suspending production of their luxury cars.
You don’t have to be a huge multinational company to adopt this tactic, though. Many smaller businesses - both new and old - have followed suit.
This includes The Bond Street Distillery, a recently opened gin distiller in Leicester, and Charpak, a long-established UK premium thermoformed packaging company in Huntingdon. We spoke with both businesses to distinguish how their respective pivots have paid dividends during the UK’s fight against COVID-19 and what other lessons companies can take from their experiences.
A report in the Financial Times showed that approximately 21,000 UK businesses collapsed during March. The statistic at the time was labelled as ‘catastrophic’.
The owner and founder of The Bond Street Distillery, Sally Faulkner, feared her brand-new business, which only opened in December 2019, could have followed suit. She said: “The bar had been incredibly busy and our sales had really taken off. After that, everyone we supplied began shutting down. It was a big blow.
“We’d watched it unfold and had put measures in place to stay open as long as we could, to make it a safe environment, but we knew it was coming. The day we found out we had to close, we closed our doors immediately. We were in shock for a couple of days.”
After the initial shock had wavered, however, things began to look a little clearer. Sally recognised there was an opportunity to put her product to better use.
She added: “Even locally, we saw a lot of posts from people, including key workers, that were wanting hand sanitisers. With us having the most important raw material, which is 96% alcohol, it seemed a natural diversification for us.”
Charpak has been a long-standing business in the UK since the 1920s, originally starting out as Charbens which made injection moulded figurines in London.
It’s pivoted a great deal since then into the company it is now that produces bespoke plastic packaging. Gary Smith, who co-owns Charpak, is used to being innovative and looking to future needs, but he’s never had to pivot quite as he has over the last two months.
He said: “It’s been a very strange time for businesses. We weren’t worried initially because a lot of our food and medical customers were still purchasing and making forward orders. We work on a lot of sushi packaging solutions and there was a whole new range starting in May – a job equivalent to approximately £1 million a year. That has been postponed for several months. That was a big blow.”
After recognising an opportunity in the visor market, Charpak worked with the technical clinicians in R&D at Addenbrooke’s hospital to present their own product that not only would be more comfortable for the wearer but would also waste far less plastic during manufacture.
The visor passed the trials and Addenbrookes are taking deliveries. A further new opportunity presented itself. Gary added: “We’ve produced something simple but effective, to make a face mask more comfortable to wear, it’s just a strip of plastic that has got a number of c-cuts in. A prototype was sent to Addenbrooke’s and they ordered 100,000 of those little clips.
“Originally, we were making approximately 6,000 per hour using two people, now we’re making 21,600 per hour with one. We’ve now opened this up to the general market, which is growing rapidly.”
While both businesses differed slightly on the long-term trade of their respective items, one factor they both agreed on was how positive their pivots have been. For Charpak, the switch to visors and clips has created additional work in conjunction with Network Rail.
Gary said: “We entered a production scenario at the beginning of May and we have got enough foam to approximately make 250,000 of these visors. We’re also working on a visor that has been designed to fit on to a hard hat. We’re working in conjunction with Network Rail and they have got some samples of that at the moment. Something like that could be an ongoing product for us if it is successful.”
While other products at Charpak have taken a backseat during COVID-19, gin still remains popular and The Bond Distillery revealed that sales had, in fact, been boosted in line with the success of its hand sanitiser product. As of the end of April, The Bond Distillery had made 550 litres worth of hand sanitiser, selling it to the general public, local and national businesses, schools, the NHS, care homes and local paramedics.
Sally Faulkner said: “We have received a lot of nice messages off the back of that (the hand sanitisers) and, as a result, we’ve seen a huge upturn in gin sales. The community seems to have really got behind us, despite everything happening at the moment.”
Charpak is not new to the R&D scene. Myriad Associates have been helping them claim R&D tax credits for a number of years now with the company's attitude to innovation meaning it is able to claim a ‘substantial amount of money’ each year.
It is that drive for innovation that he feels is the key factor in businesses that thrive and those that do not - a rule that will be the same even beyond COVID-19.
Gary Smith added: “The ability to change direction and make a decision quickly can often be the difference between a business that thrives and one that doesn’t. We’ve always been fairly good at that.
“Innovation is the main driver of our business. It’s all about coming up with something new and not doing the same job that everyone else does. We try and do things better, we try and use less plastic, and produce something that will protect products better.”
On the flip side, it has to be remembered that Sally Faulkner is still only a few months into life as a business owner. COVID-19 has provided a very early sharp lesson to The Bond Distillery, but within that, Sally has seen the importance of being able to diversify when the climate calls.
She said: “That’s the key to any successful business. You have to be able to diversify and be willing to keep up with the current climate and demand. We were naturally taken towards hand sanitisers – that’s where the demand was for us.”
Myriad Associates is a leading R&D Tax Relief and R&D Grant Application Writing Specialist.
We deliver intelligent and maximised R&D Tax Credit claims, R&D Grant Application services, Video Games Tax Relief claims, and Research and Development Capital Allowances claims.
Our head office is based at Darian House in Market Harborough, Leicestershire, a convenient central location from where we are able to serve our clients across the UK.
Contact us today to determine whether your business would qualify for R&D Tax Credits, Grant Funding, Video Games Tax Relief or R&D capital allowances.